In recent years, investing in the apartment sector seemed a surefire strategy for success. Rents were rising quickly, and rising wage growth and strong employment trends supported projections of robust fundamentals into the future.

Apartment rents rose dramatically in recent years, but the pace of growth is clearly decelerating. What does the future hold for the multifamily sector, and has rental growth reached the breaking point?

In the post-pandemic era, investors saw strong growth in multifamily rents. National apartment rents grew 14.5 percent in 2021, according to Yardi Matrix, and 6.4 percent in 2022. Rising rents reflected strong wage growth as well as rising inflation.

“A key driver of apartment rent growth since the pandemic has been really robust increases in household incomes,” says Ron Zeff, founder and CEO of Carmel Partners. Since its founding, Carmel has bought and renovated or developed, or is in the process of renovating or developing, more